Paytm shares: Emkay Global raises target price to Rs 1,600 on strong Q2

Emkay Global reiterated its 'Buy' rating on Paytm, raising the price target to Rs 1,600 after strong Q2 FY26 results. The firm cited robust earnings, record merchant subscriptions, and a long growth runway for its payments and financial services.

Brokerage firm Emkay Global has said that Noida-based Paytm has delivered strong earnings, with profitability and revenues surpassing Street estimates. The brokerage reiterated its 'Buy' rating and raised its price target to Rs1,600 (up from Rs 1,500), citing strong execution and an attractive risk-reward profile for the stock.

Paytm's Strong Q2 Performance

As part of its Q2 2025-26 results ending September, Paytm had reported a 71 per cent sequential increase in profit after tax (PAT) at Rs 211 crore for the quarter, excluding a one-time charge of Rs 190 crore. Merchant subscriptions for the payments firm reached an all-time high of 1.37 crore, up 25 lakh year-on-year, underscoring Paytm's continued innovation-led leadership in merchant payments.

Emkay Global's Bullish Outlook

Strong Execution in Merchant Acquisition and Loans

"Paytm is executing well on acquiring merchants by leveraging its superior Soundbox products and distributing loans to them. With low penetration of loans, we see a long growth runway for this business," said Emkay Global, as part of commentary on the payment firm's results.

Capitalising on Revolving Credit Opportunity

The report further emphasised that Paytm is well placed to capitalise on the expanding opportunity in revolving consumer credit, driven by credit on UPI and RuPay credit cards. Emkay said, "We believe Paytm is well placed to capitalise on this shift, with strong credit on the UPI product (Postpaid) and a QR-based acceptance network to capitalise on RuPay credit card spends."

Attractive Risk-Reward Profile

Emkay's analysts also highlighted Paytm's "strong control over costs" and long growth runway for payments and financial services. "Considering cash on the books of Rs 13.1 billion (Rs 13,100 crore), the long growth runway for payments and financial services, and the various optionalities (such as BNPL, Wallet, and scale-up of RuPay Credit Cards), we believe the risk-return (for Paytm) is attractive," added the brokerage firm.

Future Growth Drivers and Projections

AI as a Future Revenue Driver

Citing the company management, Emkay said that while AI has mostly contributed to cost efficiencies until now, going ahead, 'it will be a revenue line driver with new AI product lines'.

Financial Projections and Profitability

Emkay expects a 25 per cent revenue compound annual growth rate (CAGR) for Paytm over FY25-27, with PAT of Rs 16.5 billion (Rs 1,650 crore) in FY27, and noted that "as the company would be turning EBITDA-positive and profitable in FY26, PAT and EBITDA CAGR would be much higher."

The report commended Paytm's strong operating leverage, stating that "improving profitability will aid valuations." (ANI)

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